Six Months Until The Largest Tax Increase In US History!

[Obama 2012 1,714]

Bend over and get ready to receive the the pain come January 2011....

We've only begun to see the economic dowturn. Just wait until next year..

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http://atr.org/six-months-untilbr-largest-tax-hikes-a5171#

In just six months, the largest tax hikes in the history of America will take effect. They will hit families and small businesses in three great waves on January 1, 2011:

First Wave: Expiration of 2001 and 2003 Tax Relief

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011:

Personal income tax rates will rise. The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed). The lowest rate will rise from 10 to 15 percent. All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates. The full list of marginal rate hikes is below:

- The 10% bracket rises to an expanded 15%

- The 25% bracket rises to 28%

- The 28% bracket rises to 31%

- The 33% bracket rises to 36%

- The 35% bracket rises to 39.6%

Higher taxes on marriage and family. The “marriage penalty” (narrower tax brackets for married couples) will return from the first dollar of income. The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level. The dependent care and adoption tax credits will be cut.

The return of the Death Tax. This year, there is no death tax. For those dying on or after January 1 2011, there is a 55 percent top death tax rate on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors. The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011. These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare

There are over twenty new or higher taxes in Obamacare. Several will first go into effect on January 1, 2011. They include:

The “Medicine Cabinet Tax” Thanks to Obamacare, Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The “Special Needs Kids Tax” This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit). There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education.

The HSA Withdrawal Tax Hike. This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.

Third Wave: The Alternative Minimum Tax and Employer Tax Hikes

When Americans prepare to file their tax returns in January of 2011, they’ll be in for a nasty surprise—the AMT won’t be held harmless, and many tax relief provisions will have expired. The major items include:

The AMT will ensnare over 28 million families, up from 4 million last year. According to the left-leaning Tax Policy Center, Congress’ failure to index the AMT will lead to an explosion of AMT taxpaying families—rising from 4 million last year to 28.5 million. These families will have to calculate their tax burdens twice, and pay taxes at the higher level. The AMT was created in 1969 to ensnare a handful of taxpayers.

Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or “depreciate”) equipment purchases up to $250,000. This will be cut all the way down to $25,000. Larger businesses can expense half of their purchases of equipment. In January of 2011, all of it will have to be “depreciated.”

Taxes will be raised on all types of businesses. There are literally scores of tax hikes on business that will take place. The biggest is the loss of the “research and experimentation tax credit,” but there are many, many others. Combining high marginal tax rates with the loss of this tax relief will cost jobs.

Tax Benefits for Education and Teaching Reduced. The deduction for tuition and fees will not be available. Tax credits for education will be limited. Teachers will no longer be able to deduct classroom expenses. Coverdell Education Savings Accounts will be cut. Employer-provided educational assistance is curtailed. The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed. Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA. This contribution also counts toward an annual “required minimum distribution.” This ability will no longer be there.

[bszoom42 0]

Ouch!

[Mr. Big Dog 10,747]

Ah, the Republican Party goes into scare mode. What a surprise.

[Usui Takumi 1,562]

Ah, the Republican Party goes into scare mode. What a surprise.

Yeah this is NOT the largest tax increase in history.

[thongd4me 69]

It's not only that but sooner or later the trust in the "almighty dollar" will wane thin and

we won't be able to afford anything produced overseas, especially in Asia.

The uptick in the dollar's value versus the Euro may or may not last but from

the looks of both our banking systems both will be in the toilet.

The government continues to spend money for "unfunded entitlements" such as

social security, veterans benefits and soon to be US Grade A health care.

They've been playing with the books for too long and sooner or later the crows

will come home to roost. Looks like next year will be the first step of the next

leg down instead of "recovery and clear sailing." It's a pessimistic view yes,

but one which I've researched extensively. I hope I'm wrong but it doesn't look

very good in light of what's been going on these last few months.

Just hedge any bets.

[Ban Hammer 14,032]

but didn't obama promise no increase in taxes on the middle class?

[Scott & Lai 12]

Ah, the Republican Party goes into scare mode. What a surprise.

Oh, so taxes aren't going up...whew, that's a relief.

[Obama 2012 1,714]

but didn't obama promise no increase in taxes on the middle class?

Obama promised a lot of things (just like every other politician out there). and I'm enjoying the "i told you so moments" I get to have with all of my moron friends who voted for this guy.....

[sly_wolf 199]

It's always amusing to see how people think that the grass is always greener on the other side or at least would be greener.

[Mr. Big Dog 10,747]

Oh, so taxes aren't going up...whew, that's a relief.

Well, these are the "tax increases" the GOP lead Congress enacted back in 2001 and 2003. If they didn't want to "increase" taxes down the road, they could have enacted permanent tax cuts rather than the temporary tax relief they enacted.

In 2001 and 2003, the GOP Congress enacted several tax cuts for investors, small business owners, and families. These will all expire on January 1, 2011

[Scott & Lai 12]

but didn't obama promise no increase in taxes on the middle class?

Simple. If you have a job, you are "rich" and will pay more taxes. If you have no job, you are lower class and won't pay taxes. The middle class no longer exists, so there will be no tax increases on them. So, Obama is keeping his promise.

Well, these are the "tax increases" the GOP lead Congress enacted back in 2001 and 2003. If they didn't want to "increase" taxes down the road, they could have enacted permanent tax cuts rather than the temporary tax relief they enacted.

So, where are the scare tactics? The point of the OP article is that taxes are going up in 2011. Are they or are they not going up?

[Obama 2012 1,714]

Well, these are the "tax increases" the GOP lead Congress enacted back in 2001 and 2003. If they didn't want to "increase" taxes down the road, they could have enacted permanent tax cuts rather than the temporary tax relief they enacted.

Wasn't exactly possible as the Taxocrats love to take money from everyone to feed their bellies. The votes simply weren't there for that.

[Mr. Big Dog 10,747]

The point of the OP article is that taxes are going up in 2011. Are they or are they not going up?

That's hardly news - it's been looming for up to a decade.

Edited July 2, 2010 by Mr. Big Dog

[SMOKE 1,426]

That's hardly news - it's been looming for up to a decade.

so when obama promised no tax increases, he knew that was a lie?

[Mr. Big Dog 10,747]

so when obama promised no tax increases, he knew that was a lie?

I thought he promised not to raise taxes. He hasn't. The GOP Congress back in 2001 and 2003 has done that.